Risk management

Risk management is the cornerstone of the fund, and an integrated part of the models used. DQS Absolute Return Fund only takes positions in liquid exchange traded products in the US and Europe. This makes it possible to close positions very quickly without disrupting the market.

DQS Absolute Return Fund uses three layers of risk management:
- The first layer is established by the use of uncorrelated models and assets. Individual positions are small compared to the total portfolio.

- A second layer of risk management is done on the portfolio level. If the value of the portfolio depreciates below certain levels, the leverage of the positions will be lowered.

- The use of stop-losses on individual positions establishes a third layer of risk management.
 
Furthermore, the size of the positions is dependent on the volatility of the markets. In markets and products with a high volatility, smaller positions are taken, in which case stop-loss levels are set further away from current levels. The result is that the maximum loss per position will be the same in volatile and non-volatile periods.

Risk profile compared with stock market
If we compare the monthly results of DQS Absolute Return Fund with those of the stock market, we can see that the worst-performing months of DQS Absolute Return Fund are still far better than the worst-performing months of the stock market (in this case the Dutch AEX index). The diagram below shows that the downside risk of the fund is lower than that of the AEX index (left side of the diagram), but the upward potential higher (right side of the diagram).